18 February 2010 02:04 [Source: ICIS news]
ORLANDO, Florida (ICIS news)--The US ethanol sector stands a good chance of winning its political battles in 2010, including the crucial extension of a tax incentive programme due to expire at year-end, the head of the main industry group said on Wednesday.
“Without a question, the biggest challenge this year will be getting the ethanol tax incentive programme extended,” Bob Dinneen, president of the Renewable Fuels Association (RFA), told ICIS news in an interview (see video below).
“We are very optimistic we are going to get that done...ethanol is far too important for us to do anything but to succeed,” Dinneen said at the conclusion of the National Ethanol Conference in Orlando, the US industry's biggest annual event.
Under the incentive programme, the US government gives a tax credit of 45 cents/gal for ethanol blended in gasoline.
The tax credit is a lightning rod for biofuels opponents, who contend the US ethanol industry would not survive if it were not for public purse – a point on which many within the industry readily agree.
The RFA defends the incentive by arguing that the US fuel ethanol programme is still in its infancy and that other industries, including the petroleum sector, also receive some sort of government subsidy.
Dinneen said the other key battle the industry faces is persuading the government to lift the so-called blend wall – the 10% limit (known as E10) on ethanol blending in gasoline.
The higher mix would avoid the looming saturation of the E10 market as US ethanol production rises.
Ethanol makers claim blends higher than E10 are safe, but critics argue that an increase in the blend level could damage engines and interfere with vehicle performance.
Car manufacturers are also reluctant to see higher blends introduced, concerned over liability and safety issues and possible warranty complaints.
The EPA in December said initial results had found higher blends performing adequately, indicating that it could grant some type of waiver once more testing is completed.
Dinneen said he expected the agency to review enough data in the next few months and that a waiver could be granted by mid-year.
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